'If you must back up to a network or external disk that’s not under your control, you can turn on FileVault to encrypt data stored in your home directory. This data will also be encrypted in the backup. However, Time Machine will perform backups only when you are logged out of your user account.'

How can I check to see if the Time Machine backups are actually encrypted?

No.

Time Machine backups are not encrypted by default. You have to opt-in. The configuration is easy if the backup drive is connected via USB/Firewire. If the backup drive is connected by Ethernet/Wi-Fi, the process of setting up Time Machine is more complicated.

Connected via USB/Firewire

Select the option in System Preferences → Time Machine → Select Disk

Connected via Ethernet/Wi-Fi

Basically, you need to manually create an encrypted sparse bundle on the external drive to which you will back up.

Figure out the name of your computer (and make sure it doesn’t contain spaces) in System Preferences → Sharing

Figure out the address of your main ethernet card. Type in the Terminal.app located at /Applications/Utilities/Terminal.app

ifconfig en1 | grep ether

MacbookAir: en0 is Wi-Fi
Other Macs: en0 is Ethernet and en1 is Wi-Fi

Write down the address for later use.

Open Disk Utility.app and create a new image:

a)Save As: ComputerName_EthernetAddress (without ":")

b)Name: ComputerName

c)Size: Choose a custom size.

d)Format: Mac OSX Extended (Journaled)

e)Encryption: Choose what you prefer. 128-bit is faster

f)Partitions: Single Partition, Apple Partition Map

g)Image Format: sparse bundle disk image

Open Keychain Access.app and move the password from your personal keychain (login) to the system keychain.